The fluctuations in incomes inherent in rural communities can be attenuated by reciprocal insurance. We develop a model of such insurance based on self-interested behaviour and voluntary participation. One individual assists another only if the costs of so doing are outweighed by the benefits...

Unemployment influences people’s life satisfaction beyond negative income shocks. A large body of literature investigates these non-pecuniary costs of unemployment and stresses the importance of social identity and therefore social norms, especially for men. We add to this literature by...

The neoclassical model in economics envisages humans as amoral and self-regarding (Econs). This model, also known as the homo-economicus model, is not consistent with the empirical evidence. In light of the evidence, the continued use of the homo-economicus model is baffling. It also stymies...

An important aspect in determining the effectiveness of gift exchange relations in labor markets is the ability of the worker to "repay the gift" to the employer. To test this hypothesis, we conduct a real effort laboratory experiment where we vary the wage and the effect of the worker's effort...

Numerous signaling models in economics assume image concerns. These take two forms, as relating either to social image or self-image. While empirical work has identified the behavioral importance of the former, little is known about the role of self-image concerns. We exogenously vary self-image...

The mathematical framework of psychological game theory is useful for describing many forms of motivation where preferences depend directly on own or others’ beliefs. It allows for incorporating, e.g., emotions, reciprocity, image concerns, and self-esteem in economic analysis. We explain how...

We use the trust and the dictator games to explore the effects of religious identity on trust, trustworthiness, prosociality, and conditional reciprocity within a beliefs-based model. We provide a novel and rigorous theoretical model to derive the relevant predictions, which are then tested in...

We present a psychological model of stress. Appraisal translates stressors into subjective stress. Stress reduces instantaneous utility of an individual directly and via cognitive load. Coping can be under the control of the individual or more automatic. We predict the occurrence of uncontrolled...

This paper explores how the introduction of an experience rated system of unemployment insurance affects employment and welfare in a model where implicit contracts between firms and workers give rise to wage rigidities and unemployment. In the literature, it has been argued that experience rated...

The subject of this paper is how the epistemic limitations of individuals and their biases in reasoning affect collective decisions and in particular the functioning of democracies. In fact, while the cognitive sciences have largely shown how the imperfections of human rationality shape...